Young workers to be £1,000 worse off under “flat rate pension”
Workers in their late twenties could be at least £1,000 a year worse off under plans to introduce a flat rate state pension, according to The Institute for Fiscal Studies (IFS).
The single-tier or flat rate scheme is being introduced by the government in 2016 in an attempt to simplify state pensions and will be set at around £146 per week. This change comes at the same time as auto enrolment, the flagship component of the government’s workplace pension reforms.
According to the IFS, the changes to the state pension will on average leave women £5.23 a week better off, while men will be £1.62 better off.
Those of you who are self-employed can breathe sigh of relief, as it is estimated that people who have been self-employed for 10 years will end up £7.51 a week better off under the new scheme.
It is young people who will be hit the hardest by this change though, with IFS predicting that people born in the mid-1980s could receive between £1,000 and £2,300 a year less when they retire.
With auto enrolment being rolled out already, educating yourself on these changes and how they will affect you is a vital step you should be taking. If you feel unprepared, why not have a look at our auto enrolment training seminars?